Apple bought a chip-making factory in San Jose for $18.2 million, possibly to help it with testing new chips for powering its products, says a report from the Silicon Valley Business Journal. Citing public records, the Journal said the facility is spread over a 70,000 square-foot area, and Apple purchased it last week from chip-maker Maxim Integrated Products.

Apple Inc. Buys A Small Chip-Making Factory For Reasons Unknown

Could be used for testing

The factory is located near Samsung Semiconductor, which is one of the main manufacturers of A9 processors for iPhones and includes chip manufacturing tools. Currently, Apple designs the main processors used in iPhones, iPads and the Apple Watch, while Samsung and TSMC are the actual manufacturers of the chips.

Apple is apparently considering taking a more hands-on role in creating its chips as the deal suggests, but it does not necessarily mean that the company will engage in manufacturing its own chips. The facility is small, as it is clearly mentioned in the property’s marketing material that it is well suited for “prototype, pilot and low-volume manufacturing.”

Chip companies commonly operate special, small-scale fabs for testing and tweaking new chip designs and make use of significantly larger facilities for volume production. Maxim develops analog and mixed-signal chips, and the equipment in the fab is suited for that only. It cannot be used for producing Apple’s A9 processors.

Not fit for Apple main processors

Processors featuring tiny transistors measuring 14 and 16 nanometers make use of the most advanced technology available today, and the A9 processors are based on this tech only. A 90-nanometer process was made for Samsung’s ARM chips used in the original iPhone and the iPhone 3G, while 65-nanometer technology was used for the iPhone GS. Apple’s iPhone 6s uses 14-16-nanometer A9 chips.

By contrast, the equipment at the Maxim facility has the capability of building chips with transistors that are much less advanced and measure anywhere in the range from 600-nanometers to 90-nanometers. Apple will need to purchase and install more cutting-edge equipment for upgrading the facility, or it can use the facility simply for testing other types of chips besides its line of processors.

On Monday, Apple shares closed down 0.62% at $112.48. Year to date, the stock is up by almost 2%, while in the last one month, it is down by over 2%.